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Alumni Profiles Series: David Ye

January 11, 2017

David Ye came to Duke from Fudan University in Shanghai in 1986 on a James B. Duke Fellowship and graduated with a PhD in Mathematics, specializing in algebraic geometry, in 1991. After teaching at SUNY Stony Brook, Purdue, and The University of Texas he began working in finance. Dr. Ye is currently Chief Risk Officer at State Street Global Markets.

What are your memories of your time at Duke? What was it like earning your Ph.D. as an international student?

I was coming from China in the 1980s, and there was a lot happening there economically and politically. It was a turbulent time. I was fortunate enough to get a James B. Duke fellowship to pursue my Ph.D. in mathematics. My first impression of Duke was that it was such a beautiful place, very serene. I really enjoyed that. I also had a great time interacting with my professors and advisors, in particular David Morrison and Phillip Griffiths. They were very smart and very caring. But if there’s one thing that I would highlight in particular, it’s how great the school’s administration was. I felt like I was doing well in my studies, but socially, it was a big adjustment learning both the language and the culture. The administration really did a lot to help international graduate students by setting up programs to help us assimilate. They really invested in making us feel welcome.

Could you tell us a little bit more of what you went on to do after you got your Ph.D.?

After I got my Ph.D., I continued to work on pure mathematics and I spent time as a postdoc researching and teaching at SUNY Stony Brook, Purdue, and the University of Texas. But after about six years, I wanted to do something more practical. I started considering careers in finance. This was in the 1990s when interest rates were being liberalized—with borrowing rates being set by the market rather than by central banks—and there was a lot of innovation happening.

I made the decision to move into finance in 1996, and I have worked at PNC Financial Services and Nomura Holdings. I started in my current position as Chief Risk Officer at State Street in 2010. Banking is a risky business. When the financial market moves, our clients could lose money, and we could lose money. My job is to make sure that we don’t lose more than we want to lose.

Could you tell us more about moving from academia into the finance industry? What did you have to learn in order to make that transition?

When I was a young professor, I thought that finance was just a matter of dealing with compound interest. I hadn’t realized that the math involved was actually quite extensive, and the stakes are much higher. Working in academia, I would sometimes round up to the second or third digit to get a general answer. But in banking, if you round up to even the fourth or the sixth digit, then multiply that small rounding error by a trillion, all of a sudden you have a really big number!

One of the biggest adjustments was learning how to adapt to the uncertainty built into human relationships. When I was a professor, I thought that math was all about 1+1=2—very clearly defined and mechanical. I would teach about two classes a week, and the TAs would help me grade homework, so all of my personal interactions were well managed and controlled. I didn’t really have to deal with human emotions. But once I got into banking, things were very different. The numbers were not always certain because there is no mathematical model that can perfectly describe the behavior of markets, which are ultimately driven by factors that cannot be quantified like human emotions. In the world of finance everything is very much less definitive.

Once you get out into any industry, you cannot just deal with theory. You are working with human beings and with complex relationships. You have to communicate. Not just in mathematical formulas, but in English that people understand.

I want to follow up on your discussion of communication. Given your own experience, do you have any advice on how to communicate highly technical topics to non-technical audiences?

That’s a great question. Learning how to communicate effectively was one of the major challenges in the first five to ten years of my industry career. Let me give you an example. My first job was developing quantitative models, which involves some math and some computer science. I was very confident in my technical abilities. One day my manager came to me and said, “I want to make you manager of the quantitative modeling group, but I’m taking a big risk in promoting you to this position.” I said, “What risk are you taking? You’re getting the strongest mathematician. Isn’t that the way it’s supposed to be?” But my manager insisted, “No. First, I may lose one of my strongest technical people, but I also might get a bad manager. Technical skill, and the capacity to manage, are not one and the same.” What he taught me was that good management is all about good communication. It’s about communicating up to directors, communicating with your peers, and communicating with your staff.

When it comes to an abstract concept like mathematical modeling, you have to understand your audience and use practical examples that they can understand. So when you’re speaking with a board of directors composed of engineers with a background in manufacturing, then you use metaphors drawn from engineering. You’d use very different examples when talking to people in the military or to people who are working in the theater business. The key is to never strive for perfect accuracy in your explanation of something that is very technical. You try to get across seventy or eighty percent. Because it’s impossible to get everything across.

Do you have any more advice for students who might be planning to make a transition from academia to industry?

Yes. First, really appreciate the education you are getting because it trains your mind and sharpens the way you think. Once you get into the real world, this gives you a huge advantage. But I think that too many students pigeonhole themselves in one technical area, getting deeper and deeper. In the world of industry, it’s not about how deep you can go into one particular area, it’s about how you connect the dots horizontally. This is not to say that there’s no place for people who can go deep: the training that you get in your Ph.D. prepares you to dissect complex problems very quickly, and there are very few people who can do that. The issues we face today are multidimensional, and having the capacity to dive in and digest new topics is a huge advantage. You have to be constantly curious, ready to make new connections, and never get overwhelmed by barriers. A constant curiosity and a well-trained mental capacity will carry most students far.